ROCKVILLE, Md., Nov. 8 /PRNewswire-FirstCall/ -- Vanda Pharmaceuticals
Inc. (Nasdaq: VNDA), a biopharmaceutical company focused on the development
and commercialization of clinical-stage product candidates for central
nervous system disorders, today announced financial and operational results
for the third quarter ended September 30, 2007.

Vanda reported research and development (R&D) expenses in the third
quarter of 2007 of $13.9 million, compared to second quarter of 2007 R&D
expenses of $10.2 million and third quarter of 2006 R&D expenses of $9.5
million. The increase in R&D expenses in the third quarter of 2007 relative
to the second quarter of 2007 is primarily attributable to a $5.0 million
milestone charge resulting from the submission of the iloperidone NDA,
which was partially offset by lower clinical trial costs associated with
the completion of the long-term open label portion of the Phase III trial
for iloperidone. The increase in R&D expenses in the third quarter of 2007
relative to the third quarter of 2006 was also primarily attributable to
the $5.0 million NDA milestone charge, which was partially offset by lower
clinical trial expenses for the company's iloperidone and VEC-162 Phase III
trials that were primarily completed in 2006. Total expenses for the third
quarter of 2007 were $23.5 million, compared to $17.6 million in the second
quarter of 2007 and $12.8 million in the third quarter of 2006.

Net loss applicable to common stockholders was $21.9 million for the
third 660,697 (143,303)

Accrued expenses 5,544,227 5,329,690

Deferred grant revenue (140,599) -

Other liabilities 13,258 209,851

Net cash used in operating

activities (35,019,750) (40,503,262)

Cash flows from investing activities:

Purchases of property and equipment (249,728) (1,187,295)

Proceeds from sales of property and

equipment 119,054 -

Purchases of marketable securities (107,570,370) (101,313,078)

Proceeds from sales of marketable

securities - 82,137,888

Maturities of marketable securities 60,395,000 18,520,000

Net cash used in investing

activities (47,306,044) (1,842,485)

Cash flows from financing activities:

Principal payments on obligations

under capital lease - (1,071)

Principal payments on note payable - (141,074)

Proceeds from exercise of stock

options and warrants 103,176 48,886

Proceeds from issuance of common

stock, net of issuance costs 111,254,850 53,329,951

Net cash provided by financing

activities 111,358,026 53,236,692

Effect of foreign currency translation (6,654) (3,781)

Net increase in cash and cash

equivalents 29,025,578 10,887,164

Cash and cash equivalents, beginning

of period 30,928,895 21,012,815

Cash and cash equivalents, end of

period $59,954,473 $31,899,979

quarter of 2007, compared to $16.0 million in the second quarter of
2007 and $12.1 million in the third quarter of 2006. Net loss per share
applicable to common stockholders for the third quarter of 2007 was $0.82,
compared to $0.60 in the second quarter of 2007, and $0.55 in the third
quarter of 2006.

As of September 30, 2007, Vanda's cash, cash equivalents, and
marketable securities totaled $109.4 million. As of September 30, 2007, the
company had a total of approximately 26.6 million shares of common stock
outstanding.

OPERATIONAL HIGHLIGHTS

Iloperidone

On September 27, 2007 Vanda announced that it had submitted an NDA to
the U.S. Food and Drug Administration (FDA) for iloperidone, its
investigational atypical antipsychotic for the treatment of schizophrenia.

VEC-162

Vanda announced today the initiation of a Phase III clinical trial to
evaluate the safety and efficacy of VEC-162 in chronic primary insomnia.
The trial is a randomized, double-blind, placebo-controlled study, and will
enroll approximately 400 patients. The trial will measure time to fall
asleep and sleep maintenance, as well as next-day performance and mood.
Vanda expects results in the fourth quarter of 2008.

VSF-173

On October 30, 2007 Vanda announced top-line results from a Phase II
clinical trial evaluating VSF-173 in excessive sleepiness.

FINANCIAL DETAILS

-- Operating Expenses. Third quarter 2007 R&D expenses, primarily

consisting of salaries and related costs of R&D personnel, stock-based

compensation, licensing fees, and the costs of consultants, materials

and supplies associated with the company's clinical trials and research

initiatives, were $13.9 million, up from $10.2 million in the previous

quarter and up from $9.5 million in the third quarter of 2006. The

increase in R&D expenses in the third quarter of 2007 relative to the

second quarter of 2007 was primarily attributable to a $5.0 million

milestone charge resulting from the submission of the iloperidone NDA,

which was partially offset by lower clinical trial costs related to the

completion of the long-term open label portion of the Phase III trial

for iloperidone. The increase in R&D expenses in the third quarter of

2007 relative to the third quarter of 2006 was also primarily

attributable to the $5.0 million NDA milestone charge, which was

partially offset by lower clinical trial expenses for the company's

iloperidone and VEC-162 Phase III trials that were primarily completed

in 2006.

General and administrative (G&A) expenses totaled $9.6 million in the

third quarter of 2007, up from $7.4 million in the second quarter of

2007, and up from $3.3 million in the third quarter of 2006. The

increase in G&A expenses in the third quarter of 2007 relative to the

second quarter of 2007 was primarily attributable to an increase in

marketing costs associated with the pre-launch commercial activities

for iloperidone. The increase in G&A expenses in the third quarter of

2007 relative to the third quarter of 2006 was primarily due to

increased marketing costs associated with the pre-launch commercial

activities, stock-based compensation charges, salaries and related

costs of non-R&D personnel, insurance and facility expenses.

Employee stock-based compensation expense recorded in the third quarter

of 2007 was $5.2 million, or $0.19 per share. Of the total $5.2

million, $1.1 million was recorded in R&D expenses and $4.1 million was

recorded in G&A expenses. In the second quarter of 2007 and the third

quarter of 2006, total stock-based compensation was $5.1 million and

$1.5 million, respectively.

-- Net loss applicable to common stockholders for the third quarter of

2007 was $21.9 million. This compares to a net loss of $16.0 million

in the second quarter of 2007, and $12.1 million in the third quarter

of 2006.

-- Net loss per share applicable to common stockholders for the third

quarter of 2007 was $0.82, compared to $0.60 in the second quarter of

2007 and $0.55 in the third quarter of 2006.

-- Cash and marketable securities decreased by $10.3 million during the

third quarter. Changes included $21.9 million of operating losses,

offset by increases in accrued R&D expenses and accounts payable of

$6.4 million, $5.3 million of non-cash depreciation, amortization, and

stock-based compensation expenses, and net decreases in other working

capital of $0.1 million.

-- The balance sheet at the end of the third quarter of 2007 reflected

$109.4 million of unrestricted cash, cash equivalents and marketable

securities, compared to $119.7 million as of June 30, 2007, and $31.9

million as of December 31, 2006.

FINANCIAL GUIDANCE

Vanda is updating its full year 2007 financial guidance as a result of
favorable variances from expected spending levels, and a later-than-planned
initiation of the VEC-162 trial in primary insomnia. Full year financial
results are now expected to show total cash used in company operations to
be approximately $55 million to $60 million, or $25 million to $30 million
less than previously reported. The total cash balance at December 31, 2007
is now expected to be in the range of $85 million to $90 million. Vanda
anticipates that its current funds will be sufficient to continue its
pre-launch commercial activities for iloperidone, the ongoing VEC-162 Phase
III trial for chronic sleep disorders and additional R&D activities into
mid-2008.

Net loss for the year is expected to be between $70 million to $75
million, or approximately $2.66 to $2.84 per share. Non-cash charges for
2007, consisting primarily of stock-based compensation expense and
depreciation and amortization, are expected to be approximately $20
million. Per share figures were computed on a weighted average basis of
26,362,723 shares of common stock outstanding at the end of the year.

CONFERENCE CALL

The company has scheduled a conference call for today, Thursday,
November 8, 2007 at 10:30 AM ET. During the call, Mihael H. Polymeropoulos,
M.D., President and CEO, and Steven A. Shallcross, Sr. Vice President and
CFO, will discuss quarterly results and other corporate activities.
Investors can call 1-866-578-5801 (domestic) and 1-617-213-8058
(international) prior to the 10:30 AM start time and ask for the Vanda
Pharmaceuticals conference call hosted by Dr. Polymeropoulos. A replay of
the call will be available Thursday, November 8, 2007, at 12:30 PM ET and
will be accessible until Thursday, November 15, 2007, at 5:00 PM ET. The
replay call-in number is 1- 888-286-8010 for domestic callers and
1-617-801-6888 for international callers. The access number is 60186931.

The conference call will be broadcast simultaneously on the company's
Web site, http://www.vandapharma.com. Investors should click on the
Investor Relations tab and are advised to go to the Web site at least 15
minutes early to register, download, and install any necessary software.
The call will also be archived on the Vanda Web site for a period of 30
days, through December 8, 2007.

ABOUT VANDA PHARMACEUTICALS INC.:

Vanda Pharmaceuticals Inc. is a biopharmaceutical company focused on
the development and commercialization of clinical-stage product candidates
for central nervous system disorders. The company has three product
candidates in clinical development. Vanda's lead product candidate,
iloperidone, is a compound for the treatment of schizophrenia and bipolar
disorder, for which Vanda has recently submitted an NDA to the FDA. Vanda's
second product candidate, VEC-162, is a compound for the treatment of sleep
and mood disorders, which is currently in Phase III for sleep disorders.
Vanda's third product candidate, VSF-173, is a compound for the treatment
of excessive sleepiness, which recently completed its Phase II study. For
more on Vanda Pharmaceuticals Inc., please visit
http://www.vandapharma.com.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, including
statements regarding Vanda's plans for its product candidates. Words such
as, but not limited to, "look forward to," "believe," "expect,"
"anticipate," "estimate," "intend," "plan," "targets," "likely," "will,"
"would," "should," and "could," and similar expressions or words identify
forward-looking statements. Such forward-looking statements are based upon
current expectations that involve risks, changes in circumstances,
assumptions and uncertainties. Vanda is at an early stage of development
and may not ever have any products that generate significant revenue.
Important factors that could cause actual results to differ materially from
those reflected in Vanda's forward-looking statements include, among
others, a failure of Vanda's product candidates to be demonstrably safe and
effective, a failure to obtain regulatory approval for the company's
products or to comply with ongoing regulatory requirements, a lack of
acceptance of Vanda's product candidates in the marketplace, a failure of
the company to become or remain profitable, Vanda's inability to obtain the
capital necessary to fund its research and development activities, a loss
of any of the company's key scientists or management personnel, and other
factors that are described in the "Risk Factors" section (Part II, Item 1A)
of Vanda's report on Form 10-Q for the quarter ended June 30, 2007 (File
No. 000-51863). No forward-looking statements can be guaranteed and actual
results may differ materially from such statements. The information in this
release is provided only as of the date of this release, and Vanda
undertakes no obligation to update any forward-looking statements contained
in this release on account of new information, future events, or otherwise,
except as required by law.

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